Question 6
Measurement of ROU Asset & Lease Liability (Rent paid in advance)
Y Plc (Lessor)
X plc (Lesee)
Lease term - 5 years
Annual rentals - Rs.
Guaranteed residual value - Rs.
Implicit Rate of Interest
Initial direct cost - Rs.
Lease Liability
Year
Lease Payment
1
100,000
2
100,000
3
100,000
4
140,000
100,000 in advance
40,000
12.37%
5,000
DF
0.890
0.792
0.705
0.627
ROU Asset
Lease Liability
Down Payment
Initial direct cost
PV
88,994
79,200
70,483
87,817
326,494
326,494
100,000
5,000
431,494
ROU Asset
Cash
Cash
Lease Liability
DR
CR
CR
CR
Question 4 (Subsequent Measurement)
ROU Asset
Year
1
2
3
4
5
BBF
431,494
353,195
274,896
196,598
118,299
DEP
(78,299)
(78,299)
(78,299)
(78,299)
(78,299)
BCD
353,195
274,896
196,598
118,299
40,000
Depreciation
ROU Asset
Residual Value
Lease Term
Depreciation
431,494
40,000
5
78,299
Question 5 (Subsequent Measurement)
Lease Liability
Year
BBF
1
326,494
2
366,871
3
299,874
4
224,592
5
140,000
Cashflow
(100,000)
(100,000)
(100,000)
(100,000)
NEW BBF
326,494
266,871
199,874
124,592
40,000
Finance Cost
40,377
33,003
24,718
15,408
BCD
366,871
299,874
224,592
140,000
Year 1
NCA
CA
266,871
100,000
366,871
431,494
5,000
100,000
326,494